The Josiah Bartlett Center for Public Policy is preparing a new series"Understanding the State Budget". This series will detail the numbers that make up the state budget to help understand changes that were made and better understand various changes made to the budget in historical context. We will post the complete series when it is published. Here is an excerpt:

The budget for fiscal years 2010 and 2011 passed in June of 2009 includes 38 new or increased taxes and fees that are projected to raise $318 million more than would have been budgeted without the 38 changes over the two years of the budget. Tax and fee increases can include major tax changes like increasing the Room and Meals Tax from 8% to 9% which is projected to raise an additional $27.2 million each year. On the other hand increases fees for land and condominium sales will probably raise about $70,000 each year.

The list below includes all fees passed so far this year. The bulk of them were passed as part of the budget. The list does not include fines for illegal activity. Fines are not charges designed to generate revenue for services but rather a punitive device. Each individual fee is listed but not every charge is listed as a separate fee. For example, although Health Facility Licensure Fees were increased on 23 different types of facilities, it is most reasonably described as one fee.

The 38 tax and fee increases are categorized into the ten tax increases and 28 fees although the distinction between a tax, a fee, and a charge is blurry and probably of little importance to the one paying.

2009: Thirty Eight Tax and Fee Increases. Ten tax changes and the three largest registration fees account for 88% of the $318.6M cost. In 2007, lawmakers raised 32 taxes and fees.

Each tax or fee is listed along with the amount revenue projections were increased as a result of the estimated impact of the tax change. A more complete description of the change is included in the text of HB2(2009) or in the bill listed in the case of the three fees at the end of the list. In some cases, no additional dollars were budgeted although the change will likely raise a modest amount.

Remember when candidate Barack Obama promised not to raise taxes on the middle class? Turns out that it wasn't a promise, so much as a funny joke. The White House Press Corps finally got the punchline yesterday:

When the White House Press Corps starts laughing at you, you've lost some of your effectiveness as a spokesman for the Administration. But to be fair, this Administration's fiscal policy has been downright comical.

The Union Leader posts an AP report that Gov. John Lynch is again meeting with the union representing state employees:

Lynch is meeting with State Employee' Association negotiators Tuesday, the day the union's contract expires. The existing provisions will remain in effect until a new agreement is reached

Under the Evergreen Provision passed by the last legislature, state employees will continue to receive annual step increases even though their contract has expired. This leaves little reason for the union to agree to a new labor pact when that lacks the money to increase salaries.

Sen. Judd Gregg pens a column in the Union Leader concerning the record debt being run up in Washington:

By the end of this fiscal year, our publicly held debt will be about 57 percent of GDP. This is not a good situation, but a temporary spike in debt can be managed, just as it was in the past when we were facing the crises of World Wars I and II, the Civil War and the War of Independence. In those instances, debt was rapidly paid off during the postwar periods.

Under President Obama's budget plan for the nation, this debt will not be rapidly paid off once the recession ends. Instead, it will continue to mushroom, driven by the President's new proposed spending that we cannot afford, which comes on top of looming entitlement spending we are already facing as the baby boom generation moves into retirement.

Because of this spending, we will have budget shortfalls, or deficits, averaging $1 trillion each year for the next 10 years.

Tom Fahey reports in the Union Leader that New Hampshire's two dog racing tracks have cancelled plans to hold races this summer:

Paul Kelley, executive director of the state Racing and Charitable Gaming Commission (the former Pari-Mutuel Commission), said commissioners approved applications from both the Lodge at Belmont and Seabrook Greyhound Park.

The state budget bill that will take effect July 1 allows tracks to drop their live racing and continue simulcast wagering. Rockingham Park is also covered by the bill, but continues with its harness racing schedule, Kelley said.

“I think the handwriting was on the wall, since the discussion had gone on for some time. This was not unexpected,” Kelley said.

The decision could be the end of greyhound racing in the state. A third track, in Hinsdale, closed late last year.

Dog racing in New Hampshire has shown the unintended consequences of state regulation. New Hampshire does not allow Off Track Betting, or OTB. However, if you're at a race track, you can place a bet on other races taking place around the country. This simulcast betting allows tracks to take bets year round, even on days when they are not running dogs or horses themselves.

State law had limited simulcast betting to tracks that run 90 days a year. Crowds for horse racing are down, and dog racing is practically non-existent as a spectator sport. But New Hampshire's tracks maintained live events so that they did not lose their simulcasting privileges.

For years, regulating dog racing has cost far more than it generated in state revenue. The tracks also lost money on dog racing, but not as much as they made on simulcasting. Opponents of dog racing have attacked it as both cruel to animals and costly to taxpayers, but coudl not muster the votes either to ban it, or to require the tracks to pay for the full cost of regulation.

Instead, they've succeeded in ending dog racing in New Hampshire, perhaps forever, not by adding regualtions, but by removing one. This budget bill that passed last week removes the 90 day live racing requirement for tracks that already have simulcast betting. It grandfathers the state's three current tracks but does not expand simulcastings to anyone else, preventing you or I from opening an OTB booth. Since the dog tracks in Belmont and Seabrook were only racing dogs in order to meet the 90 day requirement, they've already dropped plans to race dogs this summer.

Regardless of your opinion on dog racing, the old system encouraged races that even the track owners didn't want to run. Greyhounds won't be running in Belmont and Seabrook this summer, and it's not because of a statewide ban on dog racing. It's not even because the state has ended its subsidy of a money-losing venture. It's because lawmakers removed a counterproductive state regulation from the books, and allowed the market to eliminate an efficient business that can no longer support itself.

The Laconia Citizen's Bea Lewis reports that Belknap County Superior Court has frozen $110 million in disputed funds owned by the Joint Underwriting Association until the lawsuit filed by a coalition of health care providers is settled:

Judge Kathleen McGuire's action on Monday will keep the state from taking $110 million in surplus in the New Hampshire Medical Malpractice Joint Underwriting Association fund and using it to help balance the newest state budget. Specifically the judge ruled: "The funds at issue will not in any way be transferred prior to the final order of the court."

The state's fiscal year ends today, and budget writers had counted on $65 million from the JUA to balance the current budget. However, a late change to the budget bill delayed transfer of the $65 million until the end of July. Judge McGuire's ruling delays the transfer indefinitely.

This means the state's 2009 budget will not be balanced, but since state officials lack a unified accounting system for state spending, that shouldn't matter much. Agencies will simply continue operations using Fiscal Year 2010 revenues to pay the bills.

The order also slows down the JUA case. McGuire held a conference call with lawyers for the two parties yesterday, and canceled a hearing set for tomorrow. Without the July 31st transfer looming, the Court is in less of a hurry to settle the matter, though still hopes to have a final ruling by that date. The next hearing is now scheduled for July 10.

The Concord Monitor hosts a podcast with reporter Lauren Dorgan looking back at the New Hampshire budget process.

The Monitor's "Off the Page" podcasts provide an opportunity for their reporters to share more about the stories they cover than they can print in the daily paper. It continues to blur the line between old media and new media.

Monday, June 29, 2009

The good news is that we got through the last six months without gambling or a sales or income tax. The bad news, aside from the economy-harming "revenue enhancements," is that the state budget contains fundamental flaws that have not been fixed and that the current leadership in Concord has no intention of fixing.

The most obvious of these problems is the mandate to raise education aid annually regardless of the state's ability to do so. Unless this is changed, the state will have to substantially expand its revenue base or eliminate other core services to fund these increases.

He doesn't want the rooms-and-meals tax extending to campgrounds. And he doesn't like the way it was done, either, saying it was pushed through under the cover of darkness. He smells a cat burglar sneaking into the House - and Senate - while many slept.

But at least Bradley has a sense of humor about it. For now.

"So now on that piece of dirt, you went from zero to 9 percent," said Bradley, 61, who's made camping an integral part of his life. "That's a new tax, to use my dirt. You bring your room, you bring your meals, and then we tax you."

Bradley says he never saw the new tax coming:

But camping had never been part of the equation. Then the WMUR reporter announced the amendment, well after 11 p.m., when, no doubt, many in the camping community slept. Bradley, though, was awake, involved in his own personal nightmare.

"I said to my wife, 'Mother of God,' " Bradley said. "I was just completely blindsided, shocked. I immediately sent e-mails to our president, vice president, secretary, treasurer and executive director so they would see them first thing in the morning in case they weren't watching the news."

One of the lawmakers up late that night was Rep. Dan Eaton, the majority floor leader and a Democrat from Stoddard. He backed the amendment and tells a different story. He says everything was on the table, and everybody should have been prepared.

"I'm not sure I think there is complete lack of notice," Eaton said. "I think that had been open for discussion for several days."

The DRA Commissioner floats 11 new tax ideas on Monday, and you end up with a 9% tax increase on Thursday. Plenty of notice, according to Rep. Eaton.

The Portsmouth Herald's Sunday editorial slams the recently approved New Hampshire budget, and the legislative leaders who wrote it:

Nearly every tax disproportionately hits residents of moderate and lower incomes. There is the increased cigarette tax, increased car registration fee, and 9 percent tax on gambling winnings. We don't have casinos, or slots, so we're talking scratch tickets and bingo.

Then there's the increased rooms and meals tax and its inclusion of campgrounds. To call this closing a loophole as did Gov. Lynch and Sen. Maggie Hassan, D-Exeter, among others, is patently misleading.

Voters will never support an income tax so long as there is a lack of fiscal restraint. Democrats can continue to scream in all corners of the state that they cut spending, but this rings hollow with yet another record spending budget.

The Nashua Telegraph has picked up on a study from Harvard Professor Elizabeth Warren that claims that over 60% of all bankruptcies are caused by out-of-control medical bills:

The researchers estimate that this year medical bills are causing one American every 15 seconds to file for bankruptcy. That is not a health-care system or a national health-care policy. And it is neither economically sound nor humane.

The most frightening – and telling – thing to emerge from the Harvard study was its finding that even reasonably good employer-provided insurance is no safeguard against financial ruin.

Alarming, if true. And certainly a great reason to completely reform a system that delivers the best medical care in the world. If true. It's not.

Professor Warren has carved out a nice little niche over the past decade. Every few years, she uses the same flawed methodology to generate another study showing that medical bills are the main reason why Americans are going broke. Here's what she found in 2005.

Yet upon closer examination, it turns out that it is not just wrong, but actively, aggressively wrong. Warren and her co-authors have obscured important and obvious facts that call the integrity of the work into serious question.

The text itself raises a huge red flags. It's hard to believe that more than half of people who have been pushed into bankruptcy by a medical issue don't understand this fact. Perhaps they are not the brightest bulbs on the Christmas tree, but could it really be true that most people catapaulted into a financial crisis by their medical bills don't even notice that health care expenses are their main problem?

Warren publishes her work for the group, Physcians for a National Health Program, which advocates for a single-payer, government controlled health care takeover. That doesn't invalidate her conclusions. Her own shoddy research does.

Good science is a question searching for an answer. Warren's work is a conclusion in search of a headline.

Lauren Dorgan weighs into the conflicting claims about the increase in the New Hampshire budget. If we ignore cuts already made from 2007, and $200 million in accounting gimmicks in this year's plan, and a half-billion dollars in one-time federal stimulus money, budget supporters say that General Fund spending drops by 1%.

To Arlinghaus, of the Josiah Bartlett Center for Public Policy, Lynch isn't being straight if he's basing his budget crunching on the plan crafted in June 2007. "For the governor to say this is either flat or a cut, he has to pretend he didn't do anything last year," Arlinghaus said.

To be fair to the Governor, if you compare this budget to another budget that never really happened, and don't count the spending increases, this budget is level-funding. It only increases if you acknowledge reality.

Sunday, June 28, 2009

The Concord Monitor argues that New Hampshire can not continue to expect its state parks to be self-supporting, and calls for taxpayer dollars rather than higher fees or leasing underperforming parks to private operators:

The parks system needs a long-term management plan, and it is charged with producing one by fall. That plan should include efforts to restore and operate some properties through public-private partnerships with cities, towns and nonprofit groups. But it shouldn't count on others to come to the rescue. Municipalities and nonprofits also have their backs to the wall.

The system should also hasten to foster the creation of the "Friends of the State Parks" organization called for by the Odell Commission. Friends groups won't save the parks either, but they are part of the solution.

The Valley News editorial page comes out against the recently passed state budget, saying that time is passed for a broad-based tax:

What's done is done, but it wasn't pretty to watch, nor were the results pleasing. We're referring to the making of the New Hampshire budget, which lawmakers passed by narrow margins on Wednesday. The $11.5 billion two-year spending plan, which takes effect July 1, exemplifies what happens when a state has no place to turn for revenue because it refuses to adopt an equitable, broad-based tax. Not only do programs and services suffer; the hunt for alternative revenue sources becomes an exercise in desperation, bordering at times on absurdity. Call it the New Hampshire Disadvantage.

Lauren Dorgan take some time in the middle of her Sunday Monitor column to report on this week's progress in the case against the state's raid of the Joint Underwriting Association:

In a ruling late last week, Judge Kathleen McGuire sided with the plaintiffs on some preliminary issues, deciding that the attorney general's office cannot represent the JUA.

"Given the quasi-private/public and voluntary nature of the JUA; the lack of any State funding to implement or support the JUA; the fact that the Department does not guarantee coverage to policyholders if the JUA were unable to do so; and the broad powers and responsibilities of the JUA board, the Court concludes that the JUA is a separate entity from the Insurance Department and is not part of the executive branch of State government," McGuire ruled Thursday.

She also looks back at the budget debate, and looks ahead to the end of the State's contract with state employees.

Loser: State employees. The only consolation for the State Employees Association was the body count of lost jobs in New Hampshire is lower than in neighboring states on a per-capita basis.

In addition to layoffs, however, the final agreement slashes personnel spending by an additional $25 million (hello early retirements and worker furloughs). A $20 million cut in the Health and Human Services Department will likely add to the job cuts.

They also lost for two years long-held bumping rights that enable a veteran, laid-off worker to take the job of a less senior employee.

Then there are changes in retirement. New state employees will pay 7 percent instead of 5 percent toward their pension. Also, public retirees younger than 65 have to, for the first time, pay a monthly premium ($65 per person) for their health-insurance coverage.

Kevin's column is always loaded with great stuff from the State House.

Yesterday, we told you the story of a British artist who attempted to build a toaster by himself. As we would predict from Leonard Reed's brilliant I, Pencil, he could not.

Charlie Arlinghaus, also a fan of I, Pencil, notes that you can now purchase your own copy of this seminal essay on voluntary cooperation from the Foundation for Economic Education for the ridiculously low price of $2.

Tom Fahey leads off his Under the State House Dome column in the Union Leader with the battle between the legislature and plaintiffs from the Joint Underwriting Association:

McGuire said JUA "is not part of the executive branch of state government. Rather, it is akin to the New Hampshire Retirement System which the New Hampshire Supreme Court has held is an independent entity rather than an executive department or agency. If the JAU isn't part of the executive branch, can a governor dip into its reserves? Good question.

The first impact the standoff hits at the end of July, the date the new budget calls for a transfer of $65 million onto state books for the 2009 fiscal year. Another $45 million is supposed to come out for the 2010 fiscal year.

In February 2006, Levant was the publisher of a conservative magazine, the Western Standard. After some consideration, he decided to reprint the Danish cartoons of the Prophet Mohammed "to show our readers what all the fuss was about." It was a gutsy move. Whereas most Canadian publications decided against publishing them, Levant thought people should be free to look at these cartoons in print and judge for themselves.

This decision changed the course of his life, especially after a heated radio interview about the cartoons with Syed Soharwardy, a Calgary imam. Described in Shakedown as a "Pakistani-born, madrassah-trained preacher popular on the Saudi lecture circuit who is the president of the Islamic Supreme Council of Canada," Soharwardy launched a complaint with a human rights commission (HRC) in Alberta following a failed attempt to get Levant arrested by the Calgary police.

Saturday, June 27, 2009

Thwaites may well end up making some approximation of a modern toaster, but he'll come nowhere near his stated goal of having made one on his own. He notes on his website, for example, that he used a microwave (which of course he didn't create from scratch) to smelt the iron ore he found into steel. He used modern transportation to collect his various raw ingredients. And he fed and nourished himself through the whole process with food produced by modern agriculture and industry. No single man can make a pencil, and as Thwaites' project will demonstrate, no single man is capable of making a toaster, either.

Okay, I think it's fascinating. But I have a favorite economics parable.

State law soon to take effect provides greater authority to close under-performing stores and to open up to eight new agency stores. Plans call for new stores in Manchester and Nashua. South Willow Street in Manchester is being eyed for a major new retail store. The Conway store is up for a complete renovation, and a new store in Hampstead is scheduled to open in July.

Shira Schoenberg reports in the Concord Monitor that Market Basket isn't going along with the city's attempt to micro-manage trash disposal:

By refusing to sell the purple pay-as-you-throw bags, Market Basket has inserted itself into the controversy over a new trash system that will require Concord residents to pay for each bag of trash they throw out, beginning July 6.

Market Basket's decision was made on the corporate level, not at local stores. David McLean, operations manager for Market Basket, said the company is reviewing its policy in Concord and in multiple other communities where pay-as-you-throw has been instituted. Market Basket has 59 stores in Massachusetts and New Hampshire.

"All of a sudden, all these towns are taking on these programs and wanting businesses to subsidize the towns and do it for nothing, and have their customers foot the expense of carrying those products," McLean said.

Asking residents to pay for the service of throwing away their trash is a market-based solution. Collecting those fees by creating a trash bag cartel, and asking local retailers to subsidize your monopoly scheme, is not.

When Barack Obama and Hillary Clinton joined forces in Unity, N.H., last summer, no one mentioned that they had chosen one of the last bastions of the segregated South for their campaign rally. But in the eyes of the federal Justice Department, Unity and nine other New Hampshire towns have been on a watch list for discriminating against minority voters for the past 40 years. This week, a little-noticed Supreme Court ruling may finally force federal bureaucrats to acknowledge reality and let New Hampshire amend its election laws without federal oversight.

In the midst of the civil rights movement, Congress passed landmark legislation protecting the rights of all Americans to vote regardless of race. The federal government outlawed discriminatory state practices like poll taxes, literacy tests and grandfather clauses designed to discourage blacks from ever making it to the voting booth. The 1965 Voting Rights Act included an important provision to prevent segregationist lawmakers from inventing new ways to suppress black turnout. Under Section 5, states that had practiced discrimination, or with suspiciously low voter registration figures, would have to submit any changes to their election laws to federal authorities before they could enforce those changes.

It's been 40 years

So how did 10 New Hampshire towns get on this infamous list of suspected racists? Math. Small New Hampshire towns with low registrations in 1968 got put on the list and haven't been able to get off. In 2004, Attorney General Peter Heed asked federal authorities to take New Hampshire off its list using the "bailout" provision of Section 5. After all, Bull Connor never stood in a schoolhouse door in Rindge. No president ever called out the National Guard to integrate Hawthorne College in Antrim. The memo even provided strong evidence that several towns should never have tripped the pre-clearance trigger.

But the Justice Department couldn't see that these towns never should have been targeted in the first place.

Since 1982, only 17 districts over the 12,000 covered by Section 5 of the Voting Rights Act have successfully "bailed out" of the pre-clearance provision in the law. This week, the Supreme Court took the side of Texas municipal board in Northwest Utility District v Holder. The Court found that federal bureaucrats had been standing in the way of the district's right to "bail out" of federal election oversight. According to Assistant Attorney General James Kennedy, this ruling may finally allow New Hampshire's 10 covered towns to get the Justice Department off their backs.

This case shows that once given power over local decisions, federal bureaucrats don't want to give it up, even if the reason for that oversight has passed into history. This isn't a partisan complaint. The bureaucrats were just as likely to hold onto power during the Nixon and Reagan administrations as under Carter and Clinton. It demonstrates that when Washington steps into a state's decisions, even for the best of reasons, it is unlikely to ever step out again.

Won't notice a thing

The Northwest decision won't change your voting experience at all. The Valley News reported this week that the town clerk in Unity never knew that the town was under the thumb of federal oversight, and the Justice Department has never taken much interest in our local voting procedures. We've been ignoring the Voting Rights Act for 40 years, and both voters and the federal government have been okay with that.

The Northwest decision doesn't negate the importance of the Voting Rights Act, nor does it say that discrimination wasn't or still isn't a problem in America. It simply forces federal authorities to acknowledge reality, and allow states, counties and towns to make their own decisions. It also shows how far we've come in the past 40 years.

(Grant Bosse is lead investigator for the Josiah Bartlett Center for Public Policy, JBartlett.org.)

The ongoing case against the state's attempt to use $110 million from the Joint Underwriting Association has caught the attention of our friends at Granite Grok:

*Our friend Grant Bosse, writing at the NH Watchdog blog notes,

Michael Kitch has been doing some excellent reporting in the Laconia Daily Sun on the legal battle surrounding the state's raid on the Joint Underwriting Association.

Michael joins us to explain this rather strange place for the state to take money- a malpractice medical insurance fund. It seems as though the very sanctity of contracts and trust itself is at stake here. And what happens to the state's budget should it lose in Court?

You can listen to Michael Kitch on Meet the New Press at 9:30. Click the link to listen live.

The Union Leader notices that state budget writers who for weeks criticized calls for "back of the budget" cuts suddenly warmed to the idea before this week's final votes:

But guess what? In the budget Lynch called "tough and responsible" and all but 20 Democrats voted for, Democrats wrote in $100 million in unspecified cuts department heads will have to make. They did exactly what they decried as irresponsible.

Now we know they never were against unspecified cuts. They were against only Republican ones.

Now is an uncertain time to be an employee of the state of New Hampshire. Less than a week before the term is up for the State Employees' Association contract, there is no new one to replace it, and negotiators haven't struck a tentative deal, according to union leaders.

Meanwhile, the Legislature this week approved a budget that, according to Gov. John Lynch, will require laying off at least 200 state employees. The final tally could be much higher, depending on how Lynch, who has said he will sign the budget, meets legislators' mandate to cut an additional $25 million in personnel expenses. Lawmakers said they hoped the governor would negotiate unpaid furloughs with state unions.

Tom Fahey reports in the Union Leader that supporters of expanded gambling didn't get what they wanted in the state budget, but are taking Governor John Lynch's last minute offer to study the issue as a sign of growing gambling momemtum:

Lynch said he will appoint a gambling study commission soon to look at the expansion of gambling and issues like who should control it, own it, the number of sites and ways to prevent proliferation.

Killion said Millennium Gaming's plans are unchanged for Rockingham, where it owns an option to buy the track and set up video slot machines. It calls for a major construction project and upgrade of the horse track, with the state getting 49 percent of slot revenues.

Meanwhile, the Concord Monitor editorializes against slots, citing the experience of other states that rely on gambling revenue:

Las Vegas casinos aren't the only ones to crap out. The Trump Casino in Atlantic City filed for bankruptcy earlier this year, and The Donald and his daughter resigned from the board of Trump Entertainment Resorts.

This week, Rhode Island's Twin River greyhound and slots parlor folded a financial hand that can no longer be played in this economy. The racino can't pay the mandatory 61.5 percent of its take to the state and pay off its creditors too, so it filed for bankruptcy.

Michael Kitch has been doing some excellent reporting in the Laconia Daily Sun on the legal battle surrounding the state's raid on the Joint Underwriting Association. Unfortunately, the Sun doesn't archive its local content online, and these stories deserve to be read far and wide outside of the Lakes Region.

Michael has graciously granted us permission to post his articles here. We've uploaded his original story from Wednesday, and today's news that the judge in the case has disqualified the Attorney General's office from representing the JUA in court.Laconia Daily Sun- JUA 06-24-09

Ultimately, that will be up to a judge to decide, but policy research analyst Charlie Arlinghaus of the Josiah Bartlett Center said that in a state that refused expanded gaming, lawmakers have taken an enormous gamble."It would render the budget insolvent, and they would clearly have to come back and craft a new budget because you are not talking tweaks here and there," Arlinghaus said. "You are talking about a $110 million hole."

Corporate profits are up for the first quarter. Some people think this is good news.

The chart comes from Mark Perry at Carpe Diem, and is the latest piece of evidence in favor of Perry's prediction that the recession will be over this fall. That doesn't mean we'll get every job back or housing prices will return to their peak values, but that the economy will be growing rather than contracting by the third quarter.

In the Nashua Telegraph, Kevin Landrigan leads with Governor John Lynch's praise for a budget that raises 36 taxes and fees:

"I applaud the Legislature for passing the budget. I think it's a tough but responsible budget," Lynch told reporters.

For Lynch, the biggest challenge will be to come up with ways to cut state personnel spending by $25 million.

Lynch said his spending plan has 200 layoffs in it, and that he is open to furloughs rather than eliminating more jobs. Any furloughs should apply to all state workers – including himself, Lynch said. On Wednesday, the House of Representatives voted 202-183 for the budget bill (HB 1), about an hour after the state Senate adopted it on a 13-11 vote.

The plan provides for laying off hundreds of state employees, shuttering the Laconia prison and the Tobey School, cutting social programs, and raising a wide variety of fines and fees. Gov. John Lynch swiftly pledged to sign a budget that he had lobbied hard to pass and billed as "tough but responsible."

The total number of layoffs remains unclear. Lynch said he expects "a minimum of 200 layoffs." The budget requires the governor to trim $25 million more from personnel expenses, a target legislators said they hoped Lynch would reach by negotiating unpaid furloughs with state employee unions. If other solutions aren't found, that cut could mean laying off 750 state employees, although Lynch said yesterday that layoffs are his "least-preferred option."

Keep in mind that this budget actually includes zero layoffs. Not one. The Legislature has directed the Governor to find $25 million in personnel savings, which may come through furloughs or other mechanism. The budget defunds vacant positions, but it may not reduce state payrolls by a single employee.

New Hampshire Public Radio reports "Democrats have muscled through an unpopular budget as the state faces a historic budget deficit." You can read the whole story and listen to their report, which includes clips from the Senate debate, here.

On the floor, some Senators expressed disgust for the budget.

One called it a terrible piece of legislation.

Another- joking about decision to apply the rooms and meals tax to campgrounds- said you sleep on the dirt, eat your own food and the state still taxes you.

The majority of that money goes to relatively strong industries: The two industries that get the most stimulus funding - health care and public education - are also the two industries least affected by the current recession. These sectors, along with government employment, have actually added jobs during the current recession.

Spending in the future isn't stimulative today: Despite all the talk of "shovel-ready" projects, the Congressional Budget Office analysis of ARRA estimates that only 21 percent of spending will take place this fiscal year.

The Union Leader provides a useful summary of the many taxes and fees set to increase when the new budget kicks in July 1:

The tobacco tax, now assessed on all forms of tobacco, will go up 45 cents to $1.78 per pack of cigarettes.

Car registrations will cost $30 more with a new surcharge, based on weight. Vehicles weighing more than 5,000 pounds face higher fees. Fees fund highway maintenance and improvements, in place of plans to raise the gas tax.

Boat registration fees double, to a minimum of $24 for a motorized craft.

Rooms and Meals tax goes to 9 percent form 8 percent. The tax raises an estimated $8 million by extending it to include campsite rentals.

Gambling winnings of more than $600 will be taxed at 10 percent. It applies to all who gamble here, and all state residents no matter where they gamble.

The interest and dividends tax is extended to capture distributions by limited liability corporations.

Tom Fahey reports on a busy budget day at the State House in this morning's Union Leader:

While tax protesters rallied outside the State House chanting "No more taxes," "Ax the Tax" and "It's the spending, stupid," lawmakers in the House and Senate debated and passed the spending and revenue plan for the two fiscal years that start July 1.

In the Senate, the vote was 13-11, with two Manchester Democrats joining Republicans against the plan. One Republican crossed party lines to vote with Democrats.

In the House, the votes were 202-183 on the spending plan contained in House Bill 1, and 201 to 183 on HB 2, which contained tax and fee hikes, along with technical and organizational changes. Four House Republicans voted for the budget, and 18 Democrats voted against it.

Prior to yesterday's votes on the Senate and House, the Nashua Telegraph absolutely lambasted the Governor and Legislature over the state budget they concocted:

But we believe the governor is mistaken when he calls this a “responsible budget that fits with the times” and urges the House and Senate to approve it under the potential threat of a continuing resolution that would cost the state $11 million a month if a budget isn’t in place by the end of June.

We don’t believe the rosy revenue projections. We don’t believe enough was done to reduce the bottom line. And we don’t believe the administration will make it until the end of the year without having to make significant adjustments when revenues fail to meet expectations.

Alas, neither the Telegraph, several other editorial pages, 100 protestors on the State House steps, nor Charlie Arlinghaus were able to persuade our Legislature to nix this budget.

Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said...

...In a letter to the CEO's of both companies, Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner warned that a 70 percent sales threshold "may be too onerous" and could lead condo buyers to shun new developments, according to the paper.

The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos, the paper added.

Wednesday, June 24, 2009

The New Hampshire House approved HB 2, the revenue bill, by a vote of 201-183.

Both HB 1 and HB 2 now head to Governor John Lynch, who has stated he will sign the state's two-year $11.6 billion budget into law. The budget and most of the tax and fee increases, go into effect July 1st.

A question from Kenny on the increased car registration fee about to pass into law:

When does this fee go into effect?

I need to renew my car Friday.

The new and higher taxes in the budget go into effect on July 1st, except where specific language pushes them to a later date. Some provisions go into law on January 1, 2010. The higher car registration fees start July 1st.

My birthday is in July, and I registered by car already. I don't think I'll get a bill for the increase, but I'll let you know if it happens.

Portsmouth Herald columnist Rick Fabrizio urges lawmakers to reject the state budget, and the haphazard budget process that created it:

If Lynch wanted to effectively guide his Democratic-controlled Legislature, he would have called on it to focus on the budget in January instead of a slew of social issues. Pols spent three months on the death penalty, gay marriage and transgender rights, and only intensely focused on the budget in the past three weeks.

It has been suggested that the select few who guide the legislative session opened it with social issues by design, creating a buzz of involvement among residents that tapered off when it came time to focus on the budget. And what has a larger impact: A death penalty study committee, medical marijuana and gay marriage or a slew of increased taxes or fees?

Some reaction to this suggestion was that these legislative leaders were not that manipulative. Either that was the case though, or representatives and senators allowed themselves to get caught up in the passion of social issues instead of an arduous budget process that should have taken months of concentrated efforts, not weeks.

Why should the House and Senate reject this budget despite warnings from Lynch that a continuing resolution could cost the state $11 million a month? Because they failed to allow affected stakeholders to debate tax and fee increases that will have an impact on their lives and livelihoods.

In an otherwise good piece of work, my colleague Steve Norton of the NH Center for Policy Studies says that one of the different ways to calculate the spending increase yields a 1% cut. Not only is he wrong but to claim such a thing is to be misleading.

Steve, whose work is generally excellent and of whom I am generally an admirer, describes the way budget numbers can include total funds or general funds, how the federal stimulus money creates an unusual gap between the total increase and the general fund increase, and describes useful historical data.

However, his train leaves the rails when he says spending can be described as a cut in one sense. How does he get to this assertion? He compares the money we will spend in the budget being debated to what we would have spent last year if the legislature hadn’t been forced to roll back some of their spending increases. So spending is a decrease from what we wanted to spend but couldn’t spend. It’s more than what we spent but less than what wanted to spend last time.

Comparing the budget number as passed this time to the budget as passed last time as Steve did is not always misleading. In fact, in typical years it is a useful tool in the effort to find apples to compare to apples. We usually spend a hair more than we planned, so absent any unusual circumstances, it can be a useful number. The slight understatement of caseloads that often occurs makes the numbers roughly comparable and it’s a good number in a typical year to correct for the slight overspending that usually occurs.

The problem with using it this time is that there were unusual circumstances, very unusual and they weren’t exactly secret. Revenues were hundreds of millions of dollars below revenue estimates and spending was forced to be cut dramatically. So, for example, the comparison used $1,625 million for 2009 spending when we know that it will actually be $1,505 million. That’s not an inconsequential difference and it should send a red flag up telling you that this comparison is grotesquely misleading.

The piece’s conclusion is in fact very good. By most measures spending increased by percentages that are well below historical averages. Total spending is unusually high because of the federal dollars flowing in to supplant state spending. Policymakers can make their own minds up about whether somewhat lower increases in spending are the acceptable or if tough times – like those which we are experiencing right now - require genuine reductions in spending..

Their judgment on this point, however, should not be influenced by the one misleading segment of Steve’s piece. Spending is not being reduced by any real measure. Nevertheless, news reports and policymakers less well versed in the budget may say instead “it’s a cut by some measures and an increase by others.”

They’ll be wrong of course. It isn’t a “cut” by any meaningful definition. Many of us, including Steve, usually try to use data carefully and explain data carefully to help clarify policy decisions. Data properly explained is not a manipulative art but a useful tool. I still believe that but I’m not sure anyone else will anymore.

The State Senate has nearly completed debate of HB 1 and HB 2, and will be voting shortly. Assuming it passes, the Conference Committee reports will then be sent to the House for consideration this afternoon.

Yes, the governor and legislators made cuts in some areas. But those cuts were not enough to offset the increases they made.

The state hadn't enough revenue to continue current operations even without raising spending. That's because legislators two years ago increased general fund spending by $475 million without paying for it. But instead of cutting spending back to a level that coincided with available revenues, legislators and the governor raised spending this year, then raised revenues. And still, they had to borrow and use one-time money to pay for recurring expenses.

A large part of the motivation for the bloated stimulus package was not just to drop massive amounts of money on the American economy, but to make sure politicians got to take credit for dropping it. Stimulus opponent Judd Gregg wants to halt the use of stimulus money for the public relations campaign promoting the stimulus, as reported by the AP in the Union Leader:

New Hampshire Sen. Judd Gregg has introduced a bill that would prohibit the use of stimulus funds for signs that say a project is being carried out using those funds.

It's called the "Axe The Stimulus Plaques Act."

Gregg had voted against the American Recovery and Reinvestment Act. He says it's been a disappointment so far, doing little to address this ongoing economic crisis, create jobs, and turn around the nation's economy.

The highway signs are $300 a pop. Rather than tearing down the signs, let's just replace them:

Gov. John Lynch's recent columns on these pages are effective political spin, but I don't think they stand up well to the scrutiny of a little fact checking. Rejecting the state budget up for a vote today won't cause chaos and may result in a somewhat more liberal or somewhat more conservative budget, but it definitely will allow for an open and honest debate about significant changes that were made outside of New Hampshire's normally admirable and transparent process.

According to the governor, this budget will "decrease state spending for the next two years" and closes tax loopholes because of revenue problems. That sounds nice, but it isn't really the case.

State spending by any measure we use is increasing, not decreasing. Two years ago, the governor criticized me for using just the general fund (the amount we raise with regular taxes) in my budget analysis. He preferred to use the percentage increase for total state spending. The two-year budget being considered spends $11.55 billion over two years, an increase of about $1.2 billion over the current budget (see the totals sheet for each budget as passed on the Legislative Budget Assistant Web site at www.gencourt.state.nh.us/ns/). That's an increase of 10 percent -- not a decrease.

The more traditional number, and the one the governor used in his budget address this year, is general fund spending. In fiscal year 2009, we will spend $1.505 billion. That includes liquor commission spending and certain fine revenue for the Department of Safety, both of which are being moved out of the general fund in this budget to make the spending number seem smaller. Spending for FY 2010 including those two categories is $1.558 billion, a 3.5 percent increase -- not a decrease.

By the way, spending goes up even if you pretend that making the liquor commission its own fund counts as cutting it.

The other calculation is to divide the two years of the current budget by the two years of the last budget. The 2008-09 budget will end up spending $3.019 billion. The 2010-11 budget if you include liquor and safety will be about $3.152 billion, a 3 percent increase. One caution is that the state is going to borrow the money for school building aid, about $80 million, up from $40 million in the last biennium. It doesn't get calculated as general fund spending because it's borrowed.

Whatever statistic you use, spending is increasing by a relatively modest amount. It is not decreasing.

The governor mentions some of the things he's proud of in the budget and the tough decisions that were made. The budget makes many tough decisions. However, it also makes some very poor ones.

The budget borrows $80 million to pay for building aid. Borrowing money for operating expenses is terrible fiscal management akin to using a credit card to pay your mortgage.

Even less defensible, the budget borrows an $18 million pension contribution and uses it instead for general fund expenses. Lawmakers acknowledge that the OPEB contribution (for retiree benefits) will have to be paid back, but they say they need the money. A state borrowing money from employee pension funds is always dangerous. It's worse today because the state has a combined $7 billion shortfall in its retirement obligations.

With both Democrats and Republicans talking about voting against the budget (for different reasons), the governor trots out the ominous warning that a continuing resolution will "cost the state $11 million a month more than this budget."

The $11 million is not a spending cost. It is the combined monthly value of all of the tax hikes in the current budget. If you don't hike taxes soon enough, we miss out on the money.

But the tax hikes are the sticking point. At the 11th hour, the governor and his staff proposed a series of tax increases that had not been in his budget and had not been debated in the House or Senate. The taxes on business (or loophole closures, if you support them) were adopted without any business group being able to see the language or make an argument. Some argue the new tax creates a serious disincentive for entrepreneurs, but we haven't had that debate yet.

Similarly, campsites have never been included in the rooms and meals tax. But without any opportunity to protest, any hearings or discussion, campground owners woke up one morning to a new tax; sorry, "loophole closure." It may be a good idea, but we didn't get to have that debate.

A continuing resolution would allow more time to debate serious and significant changes rather than sliding them in at the last minute. All that will be lost is the early implementation of those tax increases that haven't yet been debated and therefore aren't included.

The budget spends more, taxes more and borrows more. The Earth will not crumble if legislators want to have an open and honest process.

Charles M. Arlinghaus is president of the Josiah Bartlett Center, a free-market think tank in Concord.

In a letter the Business and Industry Association President Jim Roche, Department of Revenue Commission Kevin Clougherty addresses concerns about how the new tax on Limited Liability Corporations (LLC's) would be implemented in New Hampshire.

Clougherty addresses technical questions on how the DRA will interpret the new law, which was rushed into the state budget without a public hearing last week. If passed, the DRA will examine the income, profits, and payments made by every LLC and determine how much compensation is appropriate. If state bureaucrats decide that an LLC is paying its officers too much, it will tax them.

Consider a low-income family of four with a car and a motorcycle. That family will pay $15 more to register a motorcycle and $30 more to register a standard-sized car. (They'd pay even more if they had a truck.) If just one person in the family smokes a pack a day, that's another $164 in taxes in the next year. Under this budget, that family will pay at least $209 in higher taxes and fees. That's if they don't own a truck, have to renew a driver's license or go camping for vacation. Adding a 9 percent rooms and meals tax to campground stays could tack on another $40.

The LA Times reports on the LA Zoo pouring millions in taxpayer money into a monkey exhibit, but without any monkeys:

The city spent $7.4 million building the China-themed primate enclosure — complete with Canary Island palm trees, artificial trees with extra springy limbs, and a viewing structure with Chinese-style tilework — after China promised to lend the zoo a trio of rare golden snub-nosed monkeys.

But now the Chinese government has taken the monkeys off the table, leaving zoo officials searching for suitable stand-in simians to take the place of the golden monkeys, known for their blue-faces and blond-hair.

I guess the zookeepers didn't ask for a Monkey-Back Guarantee.

Okay, sorry about that. The zoo is hoping to find a use for the exhibit, given the large investment.

The city agreed to pay the Chinese government $100,000 a year for the monkeys that were offered instead of pandas. Officials voted in 2006 to build the enclosure designed to look like a rural Chinese village. The enclosure was finished in 2008.

A feng shui expert hired for $4,500 tweaked the final design with a water fountain and other features meant to promote the monkeys' health and happiness.

Zoo officials are now consulting with their colleagues at other zoos to obtain native Chinese monkey species that will fit in with the surroundings.

I could learn to live with the smog. It certainly sounds nicer than my apartment.

Tuesday, June 23, 2009

Minority Leader Sherm Packard stood with a large contingent of House Republicans this afternoon to release $181.9 million in budget cuts they would propose should the state budget be defeated tomorrow. Here is the two-page release given to reporters:

We spend most of our time here at NH Watchdog worrying about the state budget, stimulus spending, basically any granite-flavor wonkism you can think of. But we also like to stand up for free speech, and salute those who stand up for freedom when it is under attack. Such is the case today, as Calgary Herald joins the fray against one of our least favorite institutions of censorship, the Canadian Human Rights Commission:

Indeed, we have always held it to be a peculiar pathology that Canada, though reflexively rejecting a two-tier health system, would tolerate a two-tier justice system. That is, as an alternative to judgment by the standards of the Canadian Criminal Code under which the accused citizen is availed of many rights, predictable procedural expectations and customary defences, Canadians will also allow their free speech and publication rights to be policed under a system of agenda-motivated provincial and federal tribunals, where none of those protections exist.

Yesterday’s Supreme Court decision carving out a narrow exemption to the Voting Rights Act may allow New Hampshire to change its election laws without federal oversight for the first time in over 40 years. Assistant Attorney General Jim Kennedy says he needs to study the ruling carefully, but it appears to apply to ten towns in the Granite State. New Hampshire authorities have been trying to remove ten towns from the Department of Justice’s jurisdiction for the past five years.

In The Northwest Utility District Number One v. Holder, the high court ruled 8-1 that a utility district in Texas could “bail out” of requirements to clear any changes to its elections with the Justice Department, despite the State of Texas being one of nine states listed as a “Covered Jurisdiction” under Section 5 of the federal Voting Rights Act. Parts of seven other states, including ten towns in New Hampshire, are also covered by the Act.

“I’ve just had opportunity to review the decision, however, I haven’t given it a full read as of this time. It appears that all political subdivisions, including those not listed under 14(c)(2) are entitled to bail out,” Kennedy said. “This seems to indicate that all the towns and unincorporated places covered in New Hampshire would be entitled to bail out.”

Under the 1965 Voting Rights Act, Congress required the Justice Department to sign off any changes to election laws in Covered Jurisdictions in order to prevent pro-segregation legislatures from imposing new hurdles on black voters. The Act abolished Jim Crow laws such as literacy tests and poll taxes. Congress specifically listed several states that had a literacy test in place, but also automatically covered any district where less than 50% of the voting age population were registered or voted in the November 1964 General Election. Low voter registration figures in ten small New Hampshire towns triggered the VRA, and any changes to local elections have been subject to federal oversight since November 1, 1968.

Those towns are Antrim, Benton, Boscawen, Millsfield, Newington, Pinkham’s Grant, Rindge, Stewartstown, Stratford, and Unity. Anything from moving a polling place to redrawing legislative districts is supposed to be submitted to the U.S. Attorney General or the federal district court in Washington D.C. for approval before those changes can be enforced.

In 2004, then Attorney General Peter Heed asked the Justice Department to let New Hampshire’s covered towns bail out of Section 5, arguing that the preclearance requirements made it difficult for the state to implement the Help America Vote Act of 2002. According to Heed’s letter, his office prepared 140 preclearance requests covering changes to New Hampshire law. Current Attorney General Kelly Ayotte submitted 58 such requests in 2005 alone.

In the Texas case, an elected Utility District board argued that since it had never practiced the racial discrimination that the Voting Rights Act aimed to prevent, it should be allowed to “bail out” from federal oversight, and questioned the constitutionality of the provision. The Supreme Court found the Justice Department has been improperly blocking Covered Jurisdictions the “bail out” option, as only 17 of the more than 12,000 covered jurisdictions have successfully bailed out of the law since 1982. The Court declined to overturn the law in its entirety. Justice Clarence Thomas dissented, arguing that the violence and intimidation that led to the Act’s passage no longer remain.

-30-This story may be reprinted with attribution to the Josiah Bartlett Center for Public Policy

In the Nashua Telegraph, Kevin Landrigan reports that Gov. John Lynch is urging lawmakers to pass the slapped together state budget into law, or risk something worse:

Like most spending plans cobbled together in the midst of a severe recession, there's something in the final version for everyone not to like, Lynch said.

"You have to acknowledge that there's something everyone is going to hate about this, but the alternative without a budget is much worse and that's the point I'm trying to drive home,'' Lynch told reporters Monday.

Not the strongest praise, but to be fair, there isn't much to like about this budget.

Opponents of President Barack Obama's massive government health care plan are staging a protest in Manchester of ABC's special report from inside the White House tomorrow evening. ABC is anchoring its news and airing a one-hour Q&A from the White House, but will not allow opponents of the plan as part of the broadcast.

Organizers of this spring's Tea Parties are planning protests in several cities, including Cincinnati, Houston, and Dallas. New Hampshire citizens plan to gather outside WMUR starting at 9pm.

We invite every able bodied freedom loving American to rally outside of their local ABC affiliate TV station with signs, airhorns, and other noisemaking devices so that we get their attention this time. The slogan “Silent Majority No More” can no longer remain just a slogan, it’s time to show that we are NOT silent anymore.

Make it sound like midnight on New Years Eve in front of every ABC affiliate TV station across the country. Make them send their reporters out to cover it live. Continue the rally through their news hour so our fellow Americans can realize how many of us share the same view.

We know that this keeps you up a little later than usual however, a little sleep lost now is better than liberties lost later. Unusual times call for unusual measures.

Our ABC affiliate is WMUR-TV right here in Manchester, NH. Perhaps a little impromptu rally is in order?